Social commerce: The past, the present, and the future

This article is kindly contributed by StudioSpace agency, Arktic Fox.

In the ever-evolving landscape of digital marketing, social commerce is changing the game. Blending the social interaction of platforms with the (mostly) seamless experience of online shopping, social commerce offers new opportunities and challenges for both brands and consumers, changing the way we approach e-commerce. With Amazon’s recent partnership with TikTok, social commerce is set to redefine the future of online shopping.

THE PAST

So what is social commerce?

Social commerce is the blend of social media and e-commerce, where users can navigate the traditional sales funnel in the place most accessible to them - online. In conventional e-commerce funnels, the journey from discovery to purchase happens across multiple different platforms.

Social commerce has taken multiple forms over the years, with Facebook first exploring social commerce in 2007. By 2014, you could purchase products directly from Facebook with the buy button, and the first test for Shoppable Ads followed shortly after in 2015. In 2016, Facebook launched its Marketplace, competing against the likes of Amazon and eBay and giving users the ability to buy and sell locally. As the trend gained momentum, social commerce spread across other social platforms, with Instagram introducing Instagram shopping in 2017, where brands could display their products within the shopping tab and tag products in posts, and users could view the product with a single tap. Back then, this redirected users away from the app, and directly onto the brand’s website or storefront to complete the purchase.

But now social commerce offers a unified experience as social platforms reclaim the end-to-end experience, as users discover products, check out reviews and tutorials, and complete their purchases without having to leave the app. Most recently, TikTok has taken the social commerce world by storm - in fact, it is now impossible to talk about social commerce without talking about TikTok, as the app continues to dominate the market, with 71.2% of users globally reporting they have bought a product after seeing it in their feed.

THE PRESENT

What does social commerce look like now?

There are two notable catalysts for the growth of social commerce.

The first is TikTok, which has cleverly shaped what the future of social commerce will look like. Unlike Meta, TikTok has understood the importance of the supply chain and has therefore built fulfilment capability to support brands to retail products through their platform and fulfill them via their shopping solutions. They also understand the power of the influencer and their social commerce proposition enables sellers to connect with influencers to maximise sales and virality.

And the second is Amazon’s recent partnership with TikTok. This move marks a major shift in strategy for the e-commerce giant, as they recognise the significance of social platforms when it comes to influencing purchasing decisions. Over half of Amazon’s shoppers are aged 25-39, so by partnering with TikTok, Amazon can tap into a younger buyer demographic who spend three times more time than the general population on the platform.

TikTok is evolving into a one-stop shop for Gen Z buyers. Known for its short-form content and viral trends, it offers a unique environment taking users from product discovery through to purchase. The platform’s algorithm, which tailors content to individual users’ interests, ensures that products are seen by potential customers who are most likely to be interested in them. By streamlining the purchase process, it increases the likelihood of conversion by meeting the shopper where they already are. As a result, almost half of TikTok users are buying products at least one a month on the platforms.

Snapchat is also seeing social commerce success, with two-thirds of Snapchat social shoppers making at least one purchase per month on the platform (which is more frequent than TikTok users).

Reddit users are also purchasing more often than TikTok users, with over half purchasing at least once a month.

Social commerce is not just changing the way brands sell products; it’s also reshaping consumer behaviour. One of the key drivers of this shift is influencer marketing. Influencers, who have built loyal followings on platforms like TikTok, Instagram, and YouTube, play a crucial role in social commerce. Their product recommendations are often more effective than traditional advertising, as they are perceived as more authentic and trustworthy.

This blend of social commerce and online shopping has led to increased volumes of UGC (user-generated content). UGC, which includes photos, videos, and reviews created by consumers, provides powerful social proof that can significantly influence purchasing decisions. When potential buyers see real people using and enjoying a product, they are more likely to trust the brand and make a purchase.

A particular trend that has exploded on TikTok & Instagram is influencers using the Amazon affiliates program. Although the program operates globally, it has predominantly seen popularity in the US, with creators such as Kaeli Mae going on to amass a following of 14 million on TikTok, 2.3 million on Youtube and 1 million on Instagram, with her ‘Clean Girl’ aesthetic and ASMR videos promoting products from ice trays to heatless hair curlers - directing followers to her Amazon storefront and turning UGC into a legitimate source of income. The impact of UGC on social commerce is not to be underestimated. You can’t scroll a TikTok FYP without seeing brands like ScrubDaddy, Stanley Cups and CosRX, and Amazon’s top-selling products reflect that.

As consumers spend more time on these social platforms, there is an increased opportunity for brands to leverage these platforms as part of their e-commerce strategy.

THE FUTURE

What will social commerce look like in the future?

Social commerce is estimated to reach approximately two trillion USD globally by 2025, growing by around 18% per year between 2021 and 2025, the equivalent of roughly 28% (or 13% excluding China) of all online retail sales in 2025. (Deloitte The Rise of Social Commerce: A growth opportunity for brands).

While the platforms will continue to adapt and innovate to drive growth, trends like live shopping and others will also fuel the growth of social commerce. This is already widely spread in China with an estimated $500 billion in goods sold via live stream last year alone, as shoppers look for new ways to discover products online, and it is likely to be adopted by developed markets as social commerce grows. Again, this type of social commerce has already been seen on TikTok, with brands like MyProtein hosting live shopping sessions with huge discounts, which could change the way brands approach online sales events in the future.

However, social commerce doesn’t come without its challenges. One of the biggest concerns is around data collection and privacy. As social platforms integrate e-commerce features, more and more data is collected, raising concerns about how this data is used and protected for their customers, equally if transactions are fulfilled via these platforms end to end it limits what data is shared with the brand or retailer.

In addition, as social commerce grows, it becomes more than a trend, it is a fundamental shift in the way we approach online shopping. As platforms continue to innovate and expand their e-commerce capabilities, social commerce will become an increasingly important part of the digital landscape as brands continue to blur the lines between social interaction and shopping. This will require brands to build new capabilities to exploit the eCommerce opportunity and will test already stretched teams and organisational resources.

There is significant potential for brands wanting to enter the social commerce space in 2024. For those seeking to exploit the opportunity, here are a few considerations and best practices to consider:

Choose the right platform. Not all social platforms were created equal. While each platform offers distinct advantages, the key to success in social commerce lies in understanding the unique behaviours and preferences of users on each platform and tailoring your strategy based on your target audience and how people buy within the individual platforms.

For example, Nike understood that TikTok is the go-to platform for Gen Z and created content that was playful, trend-driven, and aligned with TikTok’s culture. Beauty brand Sephora leveraged Instagram for its polished and curated content style, tapping into beauty influencers and their fan bases. With Instagram’s shopping features, Sephora can link products directly from posts, allowing users to purchase seamlessly.

Content is king. Create high-quality, engaging content - and what this looks like will vary depending on the platform. Instagram is for more polished, curated content, whereas TikTok favours more candid and organic content.

Gym brand Gymshark understands TikTok’s content preferences and frequently posts workout challenges, user-generated content, and influencer collaborations that feel relatable and less like traditional ads, successfully engaging fitness enthusiasts.

Leverage UGC. Encourage your customers to share their experiences to build social proof and create trust with potential customers. UGC can be more powerful than influencer content as users are more likely to trust reviews from people they can relate to.

GoPro is a great example of this, encouraging users to share their action-packed videos filmed with their GoPro cameras and frequently featuring them on their social channels to create a sense of community and provide authentic testimonials.

Collaborate with content creators. Use content creators that align with your brand to reach a broader audience and drive sales. By getting your brand in front of a wider audience, you can tap into a ready-made community who are ready to purchase the same products that their favourite content creators use.

The watch brand Daniel Wellington built its success by collaborating with micro-influencers who shared aesthetically pleasing images of the brand’s watches. This strategy allowed them to reach a niche audience and gain social proof, which led to rapid brand growth.

Measure success. Track key metrics such as engagement rates, conversation rates and return on investment (ROI) to evaluate the success of your campaigns so you can refine your strategy, make informed decisions and replicate for long-term results.

ASOS tracks engagement rates, product clicks, and purchases from its Instagram content. By constantly analysing the performance of their posts, ASOS adjusts its strategies to focus more on what resonates with its audience. They recently implemented Instagram’s in-app checkout feature, which allows them to track conversion rates more directly from the platform.